tv Presidents Trade Negotiator on Steel Aluminum Tariffs CSPAN March 22, 2018 10:02am-12:31pm EDT
we're now leave on capitol hill this morning to hear about the steel and aluminum tariffs. u.s. trade negotiator robert lighthizer is set to answer questions here before the senate finance committee. he's also expected to give an overview of the u.s. trade policy under president trump. the president, by the way, set to sign those tariffs this afternoon at 12:30 this afternoon. this is live here on c-span3. >> during which we will discuss our nation's trade policy agenda. i want to thank ambassador lighthizer for being here today and taking his very important time to be with us. he was last before this committee in june of last year and the trade agenda looks quite different now than it did then.
let's start with the north american free trade agreement. negotiations with canada and mexico began on august 16, 2017. since then, we've seen good progress toward modernizing the agreement, in particular i want to congratulate you on closing the strong chapter on sps measures that would benefit american farmers and ranchers. but many crucial issues must be addressed before the negotiations can be brought to a successful conclusion. your first priority, in my opinion, should be strengthening protections for americans -- america's creators and innovators and in particular strengthening copyright protection and enforcement provisions and creating disciplines to ensure that regulation does not undermine the market value of patented products. it is essential that any agreement reached be fully enforceable through state to state and investor state dispute
settlement and that market access gains, including in government procurement, are not weakened. it is also important that you keep in mind that an updated nafta must be passed by congress. that means that you must adhere to the objectives set out in the law passed in 2015 and that you deliver an agreement that will be supported by members who favor expanding trade with canada and mexico. there is no other viable path to enact a modernized nafta. now, i want to change the subject a bit. next up, i have to discuss what i consider to be a significant step in the wrong direction, the administration's imposition of steel and aluminum tariffs. i am deeply disappointed in the decision to impose global tariffs to address a problem caused by china. tariffs are taxes. so i am concerned about the harm
that this action will impose on american manufacturers and families, and i am astonished at the process or in reality the lack thereof for implementing the tariffs so far. ambassador lighthizer, you have been asked -- tasked with working with our trading partners on exemptions from the new tariffs. these tariffs are slated to take effect about 14 hours from now. there is no clarity on country exemptions and the recently announced process for product exclusions is prolonged and unnecessarily cumbersome. as such, i'm hoping that you can make clearer what is happening on this front today. let me turn now to an issue that is squarely within your responsibility. i am deeply concerned about chinese amerimercantilist polic that restrict u.s. exports and investment and harm american workers. from the beginning of your
tenure, you have identified chinese theft of trade secrets and the forced transfer of american technology as significant problems that must be addressed. that is why i supported and continue to support ustr section 301 investigation. but as you know, my continued support is contingent on the president choosing an appropriate remedy. is th that remedy should be targeted specifically at the perpetrator and beneficiary of china's actions and must be part of a strategy to correct china's technology policies. i really look forward to your comments on this. finally, i welcome the administration's decision to seek a renewable of trade promotion authority. i particularly welcome the president's announcement that he would use an extension of tpa to aggressively negotiate new trade agreements. i intend to use the extension process to get further details on your plan of expanding
opportunities for american businesses overseas through new and ongoing negotiations and to emphasize that these negotiations must be conducted consistent with the objectives set out in tpa. and i welcome any comments that you have to offer on that today. so with that, senator wyden, please go ahead with your statement. >> thank you very much, mr. chairman. i also want to welcome ambassador lighthizer and look forward to hearing from him. colleagues, anybody reading the trade policy news on the business pages now probably suffers from a nasty case of whiplash trying to decipher all that news. it is hard to identify a coherent strategy that will help american workers, businesses, and farmers when the dust settles. since the summer, the administration has been engaged
in negotiations with canada and mexico to update nafta, a project that is exceptionally important to our workers and the american economy. however, these talks are routinely broadsided by tweets from the president on subjects like the fantasy of mexico paying for a border wall. it creates chaos, threatens to derail the discussions, and at the very least distracts from the important issues. a decision with respect to steel and aluminum action was delayed for months as a result of political maneuvering. but then, in a meeting that was billed as a listening session, the president blurted out his plans to impose a 25% tariff on steel imports and a 10% tariff on aluminum. what followed was more of the
same. chaos. lobbyists descended on washington to get special carveouts. other countries, especially our long-standing allies, threatened retaliation. it was unclear who in the administration was responsible for making key decisions about tariffs that would take effect in very short order. it is still an open question as to which countries will be excluded and which will be included in the tariffs. you'd hope and expect that more information will be released. the tariffs are scheduled to go into effect tomorrow. now, with respect to the overnight news about china, i'm pleased the administration appears to be taking a more
deliberative approach. the fact is, china has stolen our intellectual property, held american companies hostage until they disclose their trade secrets, and manipulated their markets in a strategic manner to rip off american jobs and industries. i want to hear more this morning about how the administration will manage the 301 process going forward to get trade done right. the bottom line is, the trump administration stormed into office promising better deals, more certainty for businesses to create good-paying jobs in our country, and a stronger position in the world economy. but after 14 months, what's basically been delivered is mostly a whole lot of chaos. total chaos on trade isn't going
to create a single red, white, and blue job in america. so, we're looking forward to hearing ambassador lighthizer discuss the trade administration's agenda, and we very frankly, ambassador, we are counting on you to be a cool head in the middle of a very overheated atmosphere. i look forward to questions and hearing from the ambassador. >> thank you, senator. today, i have the pleasure of introducing ambassador robert e. lighthizer. ambassador lighthizer was sworn in as the 18th united states trade representative on may 15th of last year. since members of this committee have gotten to know bob well over the past several months and because we have a lot to talk about, i will dispense with further introductions.
it is a pleasure to have you here today. i think very highly of you, mr. ambassador, so please continue with your opening statement and we'll go from there. >> thank you very much, mr. chairman, ranking member widyde and members of the committee. i begin by saying being referred to as a cool head is an unusual experience for me but i hope i earn that. although you've had hearings, i brought my two newly minted deputies with me so that the committee can see them again. jeff garish, the deputy for middle east and asia and cj ma ho -- mahoney. i think it's important. i won't do this again, but i think it's important to remind you that we have people there. we're grateful for the fact that the committee has confirmed them, and i know that you and probably mostly your staff will rely on them and use them and they're available and very eager
to serve the united states senate committee on finance. it's a great opportunity for me to testify here before i take questions, i would like to very briefly make three points. first, i would like to thank you, as i said, for giving me my deputies and in addition to the two here and other deputy dennis shea, who's going to be the deputy in geneva who you always confirmed and greg doud, who's the chief agricultural negotiator. i would like to draw the committee's attention to the fact that in the last year, the trade deficit in goods and services rose to $556 billion and the trade in goods alone rose to $811 billion. there are of course many reasons for trade deficits, but the president believes, and i agree, that persistent, enormous deficits, to some extent, reflect market distortions around the world that treat u.s. workers and businesses unfairly. we also have a massive trade
deficit as everyone here knows with china, $375 billion last year and large deficits with the eu, japan, and a few other countries. i know that the members here have a variety of views on these figures. but we believe they raise significant concerns. they indicate that global rules of trade sometimes make it hard for u.s. companies to export. they can discourage u.s. investors and businesses from entering to certain sectors of the global economy. further, they indicate that in the united states, the cost of globalization is falling more heavily on workers in some parts of the economy that are exposed to trade, and this is a -- this is troubling. finally, they undermine the political support for the global trading system in the united states, and that's bad. third, i would like to very briefly summarize the president's trade agenda that we just put out as the committee knows, and pursuant to statute.
first, we at ustr will support the president's national security strategy. that means that our trade policy will help to build a stronger america, will preserve our national sovereignty, will respond to hostile economic competitors, will recognize the importance of technology, and will seek opportunities to work with other countries that share our goals. second, for the u.s. companies and workers to be competitive in the overseas market, we need a strong economy here at home. third, we are negotiating trade deals that will work for all americans as the members know well, the president has asked us to seek significant changes in nafta. we have already had seven rounds of talks with our partners in canada and mexico, and i believe that substantial progress is being made, but we are quickly running out of time if we're going to have this congress vote on a final passage. we've also reached out to and
begun discussions with korea chorus agreement. now that we have a full team of deputies in place, we intend to pursue vigorously free trade agreements in other parts of the world. we have a working group with the united kingdom, which you're aware of, and expect to begin the process of entering into an fta with them at the appropriate time. we have told japan that we are interested in having an fta with them when it makes sense for them. and in addition, we hope to working with this committee and others in the administration to pick out countries in africa and southeast asia for whom it would make the most sense to have an fta and begin that process. so that will begin very quickly. the consultations with this committee as well as with other people in the administration. as the chairman noted, we have asked for an extension of trade promotion authority until 2020. fourth, we are enforcing and
defending u.s. trade laws. the president said he would use all trade laws available to defend u.s. workers, and he is keeping that promise. we are, in addition, vigorously defending our laws at the wto. we seek to reform the multilateral trading system which has failed to promote liberalization. for too many members, it's become a litigation forum and not a negotiation forum and we think that is unhelpful. in short, the u.s. under -- the ustr under the direction of president trump is seeking to build a better, fairer system for global markets that will lead to a higher standard of living for all americans. i'm excited to have the opportunity to work in this area and mostly i'm excited to have the opportunity to work with the senate finance committee. thank you very much, mr. chairman. >> thank you, mr. ambassador. the administration is set to announce soon the results of
ustr's section 301 investigation into chinese theft of trade secrets. and forced transfer of american technology. the remedies under consideration reportedly include tariffs on chinese products, an action i have some qualms about. what in your mind are the appropriate criteria for determining if higher tariffs are justified, the appropriate level of any tariff increases, and the products to be covered? >> so that's an excellent question and an important question and i suspect that very soon, the president will make his decision on this 301 on ip and i hope it's well supported by members of the committee. and i suspect it will be if it's done properly. no decisions are made until the president makes them, but i expect him to make them very quickly. so, the first question that we
ask is, do we have a problem with ip theft and of course we do. if you look at the record, going back to 1991, george herbert walker bush brought a 301 against china for failure to protect ip. with their entrance into the -- and it's continued. we had one from clinton, none of which really amounted to much, and then we had a system of dialogues over the period of their time in the wto. during that time on at least ten different occasions, china made specific commitments not to do certain things in this space. it has not kept any of them. so, we start with the proposition that one of the most important part of our entire economy is the ip protection. it's an extreme competitive advantage to the united states, and it's the core of an enormous number of sectors that you don't think of quite as high-tech. we have done a study. we will put that study out very
quickly, the members, of course, will have it as soon as we possibly can give it to you as an extensive study of about 200 pages, and it documents this very, very serious problem. we see three -- four parts to it. one part is china forces, as you suggest, mr. chairman, china forces technology transfer if you want to do business in china. it's a huge area, and it affects almost every technology company that goes there. the third part, the way we analyze analyzed it, they force technology licensing at less than economic value. the third one is, they have a program that's really hundreds of billions of dollars that's state-owned buying of technology in the united states, and it's very complicated and difficult and it's not market driven either, but it's very effective in something that we have to worry about, and then the fourth leg of this, the way we see it, is the issue of just plain old
ordinary cyber theft. now, you ask about remedies, so technically, to me, among the things one would consider would be tariffs, and i'll address that right know because that's your specific question and i know concern, mr. chairman, but also restrictions on investment. we have senator cornyn, who's a leader -- one of the leaders in expanding the program, something that we're very strongly about, want to encourage. the idea, if the president decides to take this action, would be to do a lot of the kinds of thing that you want to do but do them right now. we can't be in a position, we believe, where china can go out and buy u.s. technology in a variety of ways that are troubling to us. so, the remedies that you would consider would be tariffs, and you would consider restrictions on investment. now, you ask specifically about tariffs. so how would you decide what the amount of tariffs that you would
put in place? we've given this an enormous amount of thought. i want even whether you agree with it or not to know this has been really studied. there are a variety of things in this plate of problems, in these four prongs, that are probably extremely costly to the united states economy, but difficult to quantify. let me give you a good example. cyber theft. there are studies that have cyber theft at 4 or $500 billion a year, theft of technology through cyber but that's a hard thing to quantify. so you look at the things that you can quantify. one of them is the effect on technology, forced technology transfer. and then the economists create an algorithm to decide what the cost, what the value of that should be. they begin using the system that ustr has used for years and years and years. none of these are foolproof, but they're designed to be fair.
then, if you decide -- if you decide that you're going to approximate put tariffs on, the question then become what products do you put the tariffs on. the rational approach, i would suggest, is that number one, you would take products that are in the china 2025 category, which are things that they clearly are designing this program around to get our technology, to get to where they're headed, the china 2025. i know you know those things, but they're things like advanced robotics and new energy vehicles and high speed transportation, all the real high-tech things that china came out a few years ago and said, we are going to put hundreds of billions of dollars of our resources and a program obtaining technology and use those things not in an economic way to become dominant in these spheres and i have a list and i'll go through all those if you like.
so, those kinds of products, a rational person would put on this list, i would suggest. then, with respect to the rest of them, what do you do? what we did is we created a logarithm, and it was based on past practice. and we did it in a way that i suspect every member would do it, and that is that you line up everything that you import from china and you have an axis and the things that have the most effect on china and the least effect on the u.s., you have moving towards the left. and then the purpose of your algorithm is to pick out things to the extent you can that are in that category. things that are in the category of have the maximum effect on china and the minimum effect on u.s. consumers. so, if we do this, and if we have tariffs and the president has not made that decision, but i think he'll make it quickly, you have a serious economic study of what the quantifiable
cost is, and it's much smaller than the real cost, i would suggest. and then, you use an algorithm, basically, to create a list of items that you would put tariffs on. so, for example, something that you get from china and a lot of other people, if you put a tariff on that, the effect on u.s. consumers would be minimized. that's kind of the idea of this. so, it's a sensible, moderate, appropriate amount if the president decides to do this. and it is calculated and created in a very businesslike, sensible way. now, the final thing i would say that with respect to at least one of these provisions on these four prongs, we believe there is a wto -- it's a violation of our wto rights and in that case we would bring a wto case. with respect to things that are not covered by the "w" to, we would then have other options pursuant to section 301. i apologize for the fact that i've run over my time.
that was very lengthy answer. i'll try not to do that again but i wanted to lay it out because i know it is on your mind, mr. chairman, and the mind of other members. >> i thought it was good. senator wyden. >> mr. ambassador, the president makes the final decision. you make recommendations and of course we need information about what's ahead. that's what consultation is all about. so, i want to get into a couple issues on china, couple issues on steel and aluminum. the first on china, on which products are you recommending that the president impose tariffs? this is your recommendation. >> well, in the first place, i want to make it clear that i'm part of the process, and it's not something the ustr is doing. we have a -- >> right, but your recommendation. >> yes, sir. we have the kinds of economic advisers as well as our internal professional economic people who have put together this algorithm. so, the way i start with this
is -- and i think this is how it was done, senator. the algorithm kicks out the entire amount, and then you say what things are not on the algorithm that any sensible person would put on, and that would be a list of things, to me at least, that are on my -- on the china 2025 list. so what's on the china 2025 list? i'll go through this very quickly, but i won't -- >> i'm sure. i want to know which products you're recommending. >> these are the ones that i care about. number one, i think the algorithm makes sense because i think it has maximum effect on them and minimum effect on our consumers, which is what we want. and there are a few consumer items, which in my judgment should not be on there and they're not on there but there are some items that i would put on that clearly would not be in the algorithm and those are things related to -- these are the things that china listed and said we're going to take technology, spend several
hundred billion dollars and dominate the world and these are things that if china dominates the world, it's bad for america. so here's their list. new advanced information technology. automated machine tools and robotics. >> these are products that you're recommending should have tariffs? >> i believe these items should be -- that's correct. >> thank you. anything else? >> well, it's all -- there's ten of them here. >> okay. yeah. that would be good. my colleagues have voted. let's hear all ten. >> all right. so, aerospace -- if you sit here, you're going to think this is basically america in ten years. aerospace and aeronautics equipment. maritime equipment and high-tech shipping. modern rail transport equipment. new energy vehicles and equipment. power equipment. agricultural equipment. new materials and biopharma and advanced medical products. now, every one of these, they
say they want to be mostly self-sufficient in, i think, two or three years and basically world dominant by china 2025. that's the sense of china 2025. that's what it is. and if you -- and this is not like our spies figuring this out. they put this out and say this. now you say the last time, in 2006, they put out, senator portman knows this, they put out a provision in absentithat said to be dominant in solar panels and modules and that i followed that plan and basically put the united states and most of the world out of the business. so there's a lot of reason. they did the same sorts of thing in steel and aluminum. you can do down the list. but in this case, they specifically said these are ten that are in this category. >> okay. what outcome are you seeking in your strategy with china? >> well, that's a very good question. i would say two things. number one, you'd like change in
the way they're approaching this thing, changed behavior. that would be -- you do, you know, ideally. and in some areas, i think there's potential for that. in other areas, there isn't. when i sit around with my colleagues in the administration and when i talk privately with senators, i tell them, which i think is the truth, i think at the end of the day, no matter what i do and what you do during your career and hopefully you're going to focus more and more on this issue, china is still going to be a market driven communist country. it's never going to be like us. it's always going hato have a different system that challenges our system and wants to take over the world. that's my view. but there are a lot of areas where you can make a difference and we should in those areas. the second part of my answer is, there are some areas that you just have to protect yourself from them. so you can't be in a position -- they're not going to change their attitude on these things but we can at least be in a position where u.s. industry isn't wiped out because of it.
and if we don't do that, then shame on us. >> okay. >> particularly in a case when they give you the list. >> i want to get one other question in with respect to steel and aluminum. these tariffs go into effect tomorrow. yesterday you listed some countries you're negotiating with and said the tariffs might not apply to them during the negotiations. which countries will not have tariffs applied to them as of tomorrow? >> so, the idea that the president has is that, based on a certain set of criteria, that some countries should get out. there are countries with whom we're negotiating and then the question becomes the obvious one that you think, well, okay, as a matter of business, how does this work. so what he has decided to do is to pause the imposition of the tariffs with respect to those countries. >> and which ones are they? >> well, all right.
so, we have the two nafta countries, which we know where they are. we have europe. we have australia. we have argentina. we have brazil. who am i forgetting? and obviously korea where we're negotiating the course. >> but are the tariffs going to be paused for them? i'm asking you specifically -- we're the committee of jurisdiction here. everybody here wants to be part of the consultation process. we haven't had much recently. which countries, because it's going to happen tomorrow, will not have these steel and aluminum tariffs applied to them. >> it's the list that i just gave, senator. >> thank you. thank you, mr. chairman. >> thank you. senator? >> thank you very much, mr. chairman. and ambassador lighthizer, welcome again. let me just start off by saying that i think a goal for all of us ought to be exporting our products, not our jobs, and it gets complicated beyond that, certainly, and i look at my
colleague and friend, the chairman of the ag committee and i'm sure he will say the same thing on agriculture that i will, that we need markets, we need markets for our products, but we also need a level playing field and to make sure that we're not exporting our jobs as we go. i want to specifically ask you about currency manipulation. the president said, day one of his administration, he would label china a currency manipulator. it's well past day one, and that's not happened. we've also, in nafta, had seven nafta negotiating rounds, and ustr has not specified its objectives with regards to currency manipulation, which are -- were included in the administration's nafta negotiating strategy. so you indicated to me last year that you were, quote, committed to developing effective approaches to address the problem of currency manipulation, and you would work to get the best possible enforcement tools.
we've lost in manufacturing alone over 5 million jobs in our country related to currency manipulation. so, what is the status of including strong and enforceable language on currency manipulation in the nafta negotiations? >> so, i -- we've spoken a lot. >> i don't think your microphone is working, ambassador. >> i'm sorry. i completely -- i forgot to turn it on o. somebody else turned it on. makes you wonder whether it was the chinese. >> could have been. >> might not have been. >> or the russians. >> i think it's more likely the chinese for me, senator. so, i agree completely with your proposition. currency manipulation is something that goes right across the line, it affects all the industries where we export and an awful lot of them where we don't, that we sell in our own market. it's a complicated, difficult issue. it's something -- the notion was we would cover it in nafta, not because we believe that canadians or mexicans are
currency manipulators because we, at least, right now don't. but that it would be become the kind of thing that you would put in other agreements, and it would become sort of a model. >> that's right. so the question is, will there be or won't will there currency manipulation language enforcement language in nafta? >> well, let me say, first of all, there are a number of things on which i don't know what will finally be in because i'm in the process, as you know, of negotiation. but i can tell you what my position and what's going on. what is going on is you're having the treasury department engaged in negotiations with their counterparts on this issue, not only with respect to nafta issues but also with respect to chorus. and i think it's important to know this. i asked my career people, what happened the last time you had this level of discussion about currency, where we're talking about specific things in a hard way, and they come back to me and they say, we've never had a
discussion like this. we've never had treasury ever be willing -- and this isn't a partisan -- in any of these administrations, these are career people, ever get involved in this kind of discussion like we're doing it now. so, it's an enormously important thing that we have, and a lot of it's because of push by you and a handful of other senators who have said, this is an important issue. but it is transformative in terms of the way the treasury department is dealing with this. >> so, what does that mean, though? do you think -- >> my hope is that we end up with language that deals with transparency and deals with competitive devaluations and then the other thing, just notionally, you have to think of it, you also want it to be in a position where it doesn't affect where we're not guilty of the provision ourselves and the circumstance where we do some kind of quantitative easing. now, we clearly don't do it for competitive advantages, but it has to be weaved in in a way
that somebody can't say the united states has violated the agreement. >> i understand that. they say that about the fed all the time. >> the fed goes -- >> it's not the same. >> but the notion of transparency and no competitive devaluations is very much at the heart of what we're doing, whether it's in this agreement or not, it's my view that it at least has to be enforceable here. that's my view. but there's a lot of talks going on. they're very intense, and it's -- >> well, i hope that they end up with results. we need results on this. there's been talk for years and years as long as i've been here, and so i appreciate what you're saying. we need results, and i just finally, what about the u.s./korea free trade negotiations? are we going the same thing there? because the regimen on enforcing against currency manipulation needs to be in every agreement. >> and if you said, where does it belong more than anywhere else, you would say china, japan, and korea.
so i -- listen, you and i are in complete agreement on both the pernicious effects of this and where we ought to go. my hope is that i'll prevail, but that's more or less the status quo. >> thank you, mr. chairman. >> your time is up. we'll now turn to -- let's see here. senator roberts. >> thank you, mr. chairman. and thank you for making a very excellent statement at the opening. i'd like to be associated with your remarks. ambassador lighthizer, bob, welcome back to the committee. last year, at this committee's trade agenda hearing, and in many conversations we have had since, we discussed concerns. i continue to hear in farm country the dire need to expand and explore new markets and unfortunately the ag economy has not seen improvements. it's become more concerning. in the last year, the united states, i believe, has lost its title as a reliable supplier.
that is certainly not a good thing. we've seen mexico turn to argentina to purchase wheat and brazil for corn. these should be sales with the u.s., not the other countries. the kansas wheat crop is still on the ground. we've got another crop coming on, i hope. but that crop should be on the kansas city southern railway headed for mexico. and i think probably at this juncture, i'd like to give you a little farm report. wichita, kansas, the latest government crop reports estimates that about 1% of the wheat in kansas is in excellent condition. 1%. 10% is good. all the rest is poor or very poor. that assessment comes at the same time the topsoil and moisture supplies were rated as short or very short across 81% of our state. i don't know what we did to mother nature, but she sure isn't being very helpful. we are dry. we're having a drought.
we have wheat at the dodge city elevator hovering around $4. it was $7 about 3 years ago. we even have an eastern colorado and western kansas, a hotline for people that are considering suicide. now, that's pretty bad. i mean, that's a very dire situation. we have a situation, however, that is being recognized by the white house and yourself. we just had a good visit before that. thank you for being very candid. ray starling, special assistant to the president for agriculture, trade, and food assistance said the other day that insistence on free and reciprocal trade and obviously we plan to examine that on a case by case as those threats will materialize, we will do everything in our power to protect our farmers from that sort of egregious behavior and he said if that results in retaliation against us, that tells you something about the issue of fair trade.
you said yesterday before ways and means on a four-hour marathon, you have to think about counterretaliation. you have to think about programs for farmers who are in this situation. i mean, there's a lot of things outside my realm that have to be considered. i would suggest probably talking with sonny purdue, i know you have done that, our secretary of agriculture. and then you said that you have tasked one of your deputies, deputy ustr jeffrey garish, with a portfolio covering asia on the possibility of deals with philippines, vietnam, and japan. would you put in taiwan there? they visited with me along with a lot of other people. the senator, who has left the committee right now, and i have talked at great length about some kind of relief for farmers on a case-by-case basis. i think somebody said on the staff that maybe we could have a trump tariff payment, a ttp instead of tpp.
i would much prefer we do something else. we need to sell our product, and we need to sell it to about everybody we can think of. so i encourage you to really think about this. if we continue down this road, we may have to consider some kind of a payment on a case-by-case basis to farmers. so my message to you is this. it's simple. in 2018, the ustr's trade agenda must include a focus on returning the united states to being a reliable supplier, and the ustr must actively pursue markets to sell our products. any place that you can sell grain, anything that you can give us hope to a very bad situation, not only in kansas but all over the country. on the very day that this committee was talking to the president, sorghum producers were in my office. by the way, it's sorghum, not sour gum as some have said in the administration. and i don't understand when that basis points went off 80 points
and we were talking with the president, senator toomey, and senator portman, senator thune is not here right now. and we went all around the room. i've had over 100 people, kansas farmers, in our ag hearing room with kids and they were wondering if they could farm the next year, this next crop year. i don't know what kind of a crop we're going to have, but it's bad unless weather changes. and we still have our past crop on the ground and we're not moving it. so, we're in a dire fix. we're trying to write a farm bill here and it's -- with a backdrop of severe budget limitations and we know that we have to do that, but if we have to go down the road with a special payment with regards to retaliation, that just adds another dust-up right before the farm bill. this is not a good situation.
now, i've gone over 30 seconds, but i just feel i'd better because i woke up pretty cranky. if you would like to respond, sir, i think we've had a private talk, i would be delighted to hear anything you might want to say. >> i would just say, since you're over your time, i'm not sure whether you're over my time. let's say we're both over time. i agree completely with your point. >> your time is my time, my time is your time. whatever. >> i agree completely with your position. i think that too often we think of agriculture on the defense. the fact is that every place where we have a market and we have a lot of them, the market could be much bigger. and in most cases, it's protectionism where we're going is holding us back. even the places like mexico, as you say, where we sell $18 billion, china for sure. every one of these markets. and then there are additional opportunities, and they are in east asia and in other places and we are in a position where we're going to very soon, as i say, i mean, like, next week
start the process of consulting and a deputy each doing one consulting in the administration, consulting with the house, consulting with the senate finance committee, and picking this out, deciding what our objectives is, and then going forward and deciding what the best way to get the fta is and it's not, if i have my way, it's not going to be a five-year negotiation to do all this stuff. it's going to be a focused negotiation where we get something very quickly for agriculture but also other parts of the u.s. economy and increase exports. >> okay, senator portman. >> thank you, mr. chairman. and to my successor in this job at ustr, i feel your pain. i heard you say earlier you're trying to figure out how to do your job in 23 hours rather than 24 hours a day so you can get some sleep. there's a lot going on right now. you're busy. i want to focus, if i could, on
exports, because i think, in your answer to pat roberts, you are correct. we export way below our weight. we can do much better in terms of opening markets for our products, including our ag products. we're concerned right now with the combination of the potential retaliation from the steel tariffs and potential retaliation from china on a 301 that is not yet fully formulated. and so, the concern is we could actually be seeing a reduction of exports rather than increase of exports, which is what we need and should have in the context of other countries, the united states is a relatively small exporter per capita and i think we're somewhere between tonga and ethiopia on the list. you talked earlier about the potential of extending the trade promotion authority. i hope that this committee and this body will strongly support that. tpa extension you are seeking is my understanding will be automatic unless there's a
resolution of disapproval, which i hope there won't be, and that will take you until july 30th, 2021, actually. you need that. and second, we've got to start developing some of these markets. so you mentioned earlier the united kingdom, there's, i think, a good decision by the eu this week saying during their transition period, they're allowed to negotiate trade agreements. you said there's a working group that's been formed there. if you could tell us in a moment a little bit about that. i think that's an extremely important opportunity for us with brexit. you talked about japan and southeast asia. you talked about africa. putting africa in context here, back in, let's say, 2000, i think china had about $1 billion worth of trade with africa. we had about, more or less, $50 billion, i think. and inflation adjusted terms, we're about where we were. china is now at $150 billion with africa. so what a great opportunity for us in terms of those countries of africa, but also what an
important strategic opportunity for us. so i'd like to hear what you have to say about africa. and then, just in general, how can we increase the exports, not just of agriculture products, which is important to ohio, but with regard to manufactured products, services, i think trade agreements work. i know that you're in the middle of now renegotiating and modernizing nafta, and i support that modernization. but i'm sometimes concerned about the administration's position on trade agreements. we have them with about 10% of the world. we send 47% of our goods to 10% of the world. and yet they always seem to come up as a negative. i think they're a positive. yes, they can be improved and modernized. so, lot of questions there. i appreciate your responses, and again, i appreciate the job you're doing at ust are r, whica tough job right now.
>> thank you very much. well, i, unlike you, expect to die after it. i'm going to be more like christian herder, basically, then there's dodd. so as you say there are a lot of thing there is. >> some would say that's what happened in coming to the senate. >> that wouldn't be a staffer's view. so, you know, there's an overriding problem in why we have liberalized trade and this is that the united states has low tariffs, everybody can get through -- they think they can get through litigation at the wto what they will trade for so we've had no real trade agreements on a multilateral basis forever and ever and ever. clearly we agree completely that increasing exports is what we should do. i'm just taking these in no particular order. the african issue i completely agree. with i'm not only informed by
you but senator isaacson. the first time i talked to senator isaacson he said "lighthizer, you better focus on this." and lighthizer focused on it. we are in a position where we're trying to really insist that the people who benefit are marketing before but also the idea of having an fta with an appropriate african country. it would be very good for them and potentially good for us. it's not a part of the world i had an enormous amount of expertise but i was informed by members of this committee and others. i was literally just waiting to have these deputies because i can't do that and these other things. the first thing i should have said probably in all of this, we want to be more competitive. we want more exports. it's not universal agreement but
the tax bill was an enormous step in that direction, get rid of regulations is an enormous step in that direction. these are things that make the whole economy more efficient and effective. that helps us export and make money generally. so with respect to the uk, we have a working group. there are things that we can do because they're not really competence, it's certification of lawyers and accountants and we're making headway on that and also on the kinds of things you would expect to have to talk through, some of which are contentious like when you take the trq, what is our relationship with the eu and the uk after they break up? there's a possibility of loss there and so that's a big issue but we're making headway.
our sense is with the exexception of that -- and i met as recently as last week with my counterpart, he's an excellent guy, smart guy -- my guess is we're a year away from starting real negotiations and that's to some extent that time will be dictated by a variety of things, none related to me. but it's something we want to be prepared to do that's available. so some new ftas with think is really important. the kind of things you've done to make us competitive is important and we think we'll get new exports out of the revision of bafta and chorus and these other things and if you believe in the basic ideas that we all have, which is that you have to improve services, you have to improve digital trade, you have to improve ip. those should lead to new exports and make the united states better. >> the brexit negotiations can begin in earnest a year from now so march 30, 2019.
so i think this committee would strongly be in support of that. >> mr. chairman? mr. chairman, without taking any time from senator bennett who is next -- >> next is senator grassley. >> oh, grassley and then bennett. okay. can i be recognized for a minute? >> sure. >> thank you, mr. chairman. colleagues, senator cornyn and i both serve on the intelligence committee and we there have the responsibility to protect some of america's most important secrets. we have just learned because of our committee assignment that the chairman is having a birthday today. we have been able to excavate this fact and i just want to mention this, because i know senators would like to wish the chairman well over the course of the day and he is still punching away in the ring and we hope that for the end of the year and
he and elaine go back to utah we can deliver some more bipartisan hit hits by working together so mr. chairman, happy birthday. >> well, thank you so much. [ applause ] i'm not much for birthdays. when i was a kid, i was the only kid in the neighborhood who never had a birthday party. and it even extends to today. it's a crazy psychological thing but -- [ laughter ] some people think that's my normal -- my psychological way. ♪ happy birthday to you -- >> oh, no, don't! ♪ happy birthday dear orrin, happy birthday to you ♪ and many more. [ applause ] >> for a musician who writes
music, that was the most d dischordant thing i've ever heard. senator grassley? >> maybe my colleagues have already talked to you about the administration considering $60 billion tariff package against china related to section 301. i understand 301 concerns with china related to intellectual property but i must also remind you mr. lighthizer the state like iowa stands to lose a great deal from retaliation. china buys over one-third of america's annual soybean production equates to roughly $14 billion each year. as an example of how sensitive agriculture markets are, iowa farmers still remember president carter's grain embargo as an immediate 10% rise in reduction
from grain occurred when the embargo suddenly halted grain shipment. so that's 38 years ago but that's still in the memory of farmers. so mr. ambassador, as your office or -- or your office by itself or in consultation with the usda done any analysis of what potential retaliation means for farmers in the midwest whom china has already singled out for retaliation. >> we certainly, mr. chairman, have done a lot of analysis of that in the context of the 301 but also in the context of other things. and the analysis is way beyond usda and nsc. it's a whole variety of things. at some level, whatever you decide, it's really just speculation but there's been a lot of effort, a lot of work
done on it and when you come down in almost every case, the most vulnerable sector of the economy are the ones who export, and farmers are a very sympathetic group and so they're not only with respect to the 301 but every time we take a trade action, agriculture is in the cross hairs and it's something that we're very sympathetic to and we have to be careful about and we have to decide and we will work with you to decide if that happens how we react. senator roberts, who i know very well, remembers the carter grain embargo because it was an important part of his own political career or reacting to it was own part of his political career. i know he's concerned about it, he's talked about it. i don't get out of my own lane in terms of what programs we have but i would note it's unfair in the circumstance that farmers, particularly in this case soybean farmers who number one sell an enormous amount, as
you say, $14 billion to china and if you look at the a.g. sales to china, we sell a lot of things. if you think of it, we sell $130 billion worth of stuff to china all together. and if you look at it, you get down a billion and a half, that's the second crop. that might be big for them, whatever that crop is, but it's a huge dropoff so any person that would look at this would look and see soybeans are a real problem and soybeans from the point of view of retaliation have the advantage of being grown all over the place, as near as i can tell, most everybody has some soybeans so it's something we're worried about. it's unfair, in my judgment, that farmers, particularly soybean farmers would be singled out in this. having said that, it's not possible to take the position that because of soybean farmers we're not going to stick up for our rights in a whole variety of ways and have hundreds of billions of dollars worth of other exporters and domestic
producers be punished because of unfair trade. it creates a conundrum and my sense is working with this committee we have to decide the extent to which we retaliate and the extent to which the congress in its wisdom decides there should be programs that deal with this situation where people are unfairly targeted. in a case we're doing something for the national good. but the bottom line is it's very serious. we spent a lot of time on it. usda and secretary purdue but also commerce and defense and nsc and nec. we spent a lot of time thinking about. >> i've got 30 seconds to answer a question you can say yes or no to. can i tell my constituent s we're past the point of worrying about withdrawal from nafta? >> no. >> i've still got 15 seconds left. [ laughter ] . i do want to tell you about a
tool, senator brown will probably bring this up as well, the foreign investment review act which would give the administration new power tos prevent investment in the u.s. that originates from countries that do not believe in reciprocal trade benefits. our legislation represents a targeted approach for causing behavioral changes while not jeopardizing existing trade flows. and so this is a request that you would work with senator brown and us to give you and commerce secretary ross new tools to prevent bad behavior by some of our trading partners. >> the answer is yes to that. >> senator cardin? >> thank you, mr. chairman. mr. ambassador, good to see you. i want to follow up on the -- what your response is going to be and with commerce and other agencies on retaliatory actions that are as likely to be taken
by other countries in regards to the steel and aluminum tariff. i say that because we expect there will be some reactions. and as i understand it, commerce is working out a way for exceptions. you're involved in those conversations. but i'm concerned that whereas a large company or industry may be able to have their voices heard, how do you deal with small companies that have critical supply chains that could be impacted by retaliatory action by another country where they don't have the resources to be able to get their message across to the administration. how are you going to protect smaller companies as we're going to certainly see a lot more activity not just here but around the world in regards to trade? >> well, senator, i would say first of all with respect to the
232 -- there's going to be two things going on. one is going to be the country exclusion process which we're in the process of looking at and some countries are under consideration and it's a decision that will be made by the president, not by me. >> but any company specific. >> there won't be company specific exclusions but there will be product exclusions which which is what you're referring to at the department of commerce and to the extent it's appropriate on anything that any member here -- >> but how are you going to protect smaller companies? they're not going to have the same voice large companies will have in regards to industry-specific issues. >> this is a far broader problem, obviously, than 232. it's a problem that goes about using the trade laws and dumping and countervailing about the whole disequilibrium between people who spend millions of dollars lobbying in washington and people who don't have fancy lawyers that do that.
so it's a far bigger problem than in this case. the product exclusion process at the department of commerce will be one where if somebody files an exclusion it will be looked at by professional people to make a decision. >> but what method will small companies be able to get into that process? that's my concern. industry haves have the resources to do it. big companies have the resources. but i represent a lot of small companies that don't have that type of resource on their own. they can work through their trade groups if their trade group is interested in it. how do they protect themselves? >> i'm sympathetic to your position. i think the system is set up at the department of commerce so as to make it very easy to apply. that doesn't mean you'll get the same results but it's supposed to be easy to apply and if you come to me and say i have that constituent that's not being reflected, i'll go to the department of commerce or my people will. it's supposed to be designed so as not to discriminate.
i hope it is. i'm not that close to how it's set up. >> i have another set of problems in regards to potential retaliatory actions and i'll use mccormick splice as ice. they source as much as they can in our country but you can't move the equator and they need products from other countries in order to have their spices and that's exactly the type of concern we have that they could be targeted for retaliatory actions that they have no choice. what do i tell mccormick? >> i don't know enough about they buy spies. a lot of places presumably where they buy spices are not going to be on the list where they're going to be significantly affected by the 232 in aluminum or steel. one that does come to mind where they probably do is india. i would presume india. once again, i'm not an expert in the spice industry but at least
i remember from the old days the whole space trade, the whole opium trade was basically started with europeans getting spice out of india and selling it in china so that's my frame of reference. to the extent they see specific retaliation, they ought to bring it to our attention. we focus as we've said before on soybeans but it's a concern you might have that with india. my guess is that india may be in a position where they want to retaliate. i think there's some vulnerability there. india has a substantial trade surplus with the united states and they have a some which is not particularly open. they have a system that has a number of vulnerabilities so to the extent there are individuals that have prothis problem, all i can say is we'll try to work with them. it's a serious problem and one that we have considered. >> i thank you for your willingness to work with our office, i can assure you that you will be getting some calls.
>> i'm -- i would be pleased to spend time with your people, many of whom are friends. >> thank you. >> senator cantwell? >> senator bennett is next? >> no, she was before. >> go to bennett. >> senator bennett? >> my colleagues are all being so gracious, mr., can you take the order it would be senator bennett and then senator cantwell, is that correct? >> sure. >> great, thank you mr. chairman, thank you for holding this hearing. mr. lighthizer, i want to tell you how much appreciate your candor and your willingness not to speak from a script in these hearings. so often that's what we hear. i don't necessarily agree with much of what you say but i do believe you're giving us your candid view. you mentioned in your written testimony and then in your oral testimony the need to deal with hostile economic competitors and
i can never forget who that is from the point of view of the united states but would you call canada a hostile economic competitor to the united states? >> i would call them an economic competitor. >> that's different than a hostile -- >> i agree. >> what about mexico? are they a hostile economic competitor? >>. >> only sometimes. i'm kidding, of course not. >> what about members of the eu? are any members of the eu hostile economic competitors? >> in my view, they're not. >> i think it's very important to make this distinction because our allies are hearing the administration describe them as hostile when i don't think you mean to describe them as hostile. the president may have a different view but they're hearing that and i don't want you to know that because we're hearing it as well. i wanted to go back to the discussion about agriculture. you pointed out that it's most vulnerable to retaliation of any sector that we have, isn't that
right? >> they certainly are in everybody's cross hairs. and they're vulnerable and even more so under the current economic environment. >> exactly. and you said you were sympathetic to that, that was the word you used and that -- but that we couldn't give up our right to defend our action and maybe congress could pass something up here. that's not what our farmers and ranchers want. our farmers and ranchers want o to, port the goods in the united states. they don't need sympathy, they need the administration to act responsibly. along the lines with what i was asking earlier about our describing other countries as hostile, do you think the president has any awareness, mr. lighthizer, about the effect he has on domestic politics of our allies when he makes these tweets or decides on a day that
we ought to increase increase tariffs by 25% on steel and aluminum? i think he thinks he's scaring other people. but he's not really having that effect. i wonder whether you have a sense of the politics and these other places. >> low pressure, i'm -- i'm a trump supporter, i love the president, i'm a trade expert. i'm not going to get engaged with you in a political thing. that's not what i came here to do. >> it's not a political thing. would you agree that what he says could have an affect on agricultural commodity prices in the united states if people believe that other countries are going to retaliate against the proposed trade policies of the united states? >> what i would agree with is that we have trade rights that
we have to defend and that too often farmers get the short end of the stick. >> well, that's right, they do. >> and we have to deal -- we cannot give up the fact that we have an $800 billion deficit -- >> nobody's asking you. i'm not asking you do that. >> we have to balance this. >> i'm asking you to understand that there are -- that everybody is listening and that our farmers and ranchers are bearing the brunt of it and what i'm not asking you to do is not fight for our fair rights to trade, that's not what i'm asking for. i'm asking for us to do in the a way that doesn't inadvertently -- i hope it's inadvertent, i hope it's not advertent -- drive commodity prices down at a moment when our farmers and ranchers can least withstand that. >> i'm sorry if that was -- what was the question? >> i'll just finish by saying i don't think it helps when the president announces -- i'm sure
he didn't consult with anybody here before he announced the tariffs where he said i'm going to raise transfers by 25% and three weeks later you come with a list of australia, korea, canada, mexico, european union and some others sorry we didn't really mean it. this isn't a business transaction that -- for real estate in new york city. this is the trade policy of the united states of america and i wish you guys would consult with us so that -- or just the republicans, even, so that you can understand the effect that you're having in places like weld county, colorado, where we need to have strong commodity prices and where 80% of our wheat is exported overseas. my time is up, i apologize, mr. president. i'll just acknowledge that my farmers and ranchers know very well the day that the president announced these tariff increases, tpp was being signed in chile by the enumerated countries there and they are
still waiting for this administration to have its -- what it suggested would be its unilateral trade negotiations with every member of tpp to see that their equities are being thought of by this administration. >> senator, your time is up. >> thank you, mr. chairman. >> senator cantwell? >> mr. chairman, i understand i missed the singing of your birthday but i guarantee you my voice wasn't needed, i'm not a good singer. >> couldn't have gotten worse. [ laughter ] >> happy birthday to you. >> it was plenty welcome, though. i didn't expect it. >> well, happy birthday. >> thank you, dear. >> ambassador lighthizer, the export/import bank does not have a functioning quorum. there are $35 billion in pending transactions stuck in that pipeline. do you agree the export/import bank needs a functioning quorum? >> yes. >> what is the action -- what are the actions the administration is going to take to get us a new nominee?
>> first of all, senator, as you know, that's not exactly the middle of my lane but because it affects trade it's something i care a great deal about. when i was here originally you asked me a question and we didn't -- you didn't discern the subtlety of my support but since i'm confirmed i can be more straightforward. the answer is i clearly support it. i am working, i'm working with white house personnel. i'm happy to talk to you about it, i think jeff getman, the coo, you ought to have in your office. i don't know if you've met him. he's a very strong guy. my recommendation is that you sit down and talk to him. he's a guy who's a -- somebody who i've known for a long, long time and i'm working with white house personnel. i realize it's a tricky issue but i want to work with you on
it to the extent i can because i think it's important and i think you could probably snap your fingers and get $20 billion worth of u.s. sales. >> i'm sorry, mr. ambassador. who are you talking about? >> the c.o.o. is a guy named jeff getman, he is a person i know well. he is the chief operating officer. he's very worried about everything you are worried about. >> how are you suggesting we free up this at a snap of the fingers? >> i'm saying if you can get the axiom bank operating again you will find exports very quickly, a bunch of pent up demand. >> trust me, i get this. i'm asking you how are we going to get this nominee from the white house and it's somebody that supports the bank not dismantling the bank. it's not exactly in my level of
responsibility. i agree in terms of outcome. you know the problem better than i do for sure because the problem is not the administration. >> the problem is not the administration? don't you think the white house needs to send us a name of smp who supports the bank? >> all i want is to have a quorum on the bank and have it starts working. that's as far as my interest goes. i think that's what you want, too. >> we will take you up on the offer. we work everyday to make sure the that great u.s. products can reach the customers and international markets. speaking of that, one of my predecessors -- kind of amazed he said this -- warren magnusson, "we cannot afford to ignore or misunderstand china." i'm pretty sure he probably said that in the '70s or '80s.
why? he realized china was not only a market but a competitor so i believe in co-op tirition. there are days we'll compete and some days we'll cooperate. so what steps will we take to prevent the agricultural market from my state from being retaliated against this trade war that the president is basically embracing? >> well, i would say there's a variety of things that i guess -- number one, i don't think the president is embracing a trade war. i think that's not an accurate statement. >> i'm just talking about his tweets. if he's backed off on that -- i believe anybody can learn and if he's backed off on that, that's great. >> i don't believe the president intends to start a trade war so i just -- i fundamentally disagree with the first part of what you said.
>> this tariff increasing the cost of products imported from china you don't think is going to add to this? >> well, let me ask you this because i know you care about things beyond just the items that would be retaliated against. we have a $375 billion in goods trade deficit with china. biggest in the history of the world between two countries. probably times five. we have them engaging in unfair activity and stealing technology and by the way when they get down the road and develop aerospace and take over that industry -- >> they're not going to take over aerospace, trust me. >> they seem to have it on their list of china 2025. i know you're familiar with that. aerospace and aeronautic equipment is one of the things they're taking technology and expecting to become the dominant player. so i know you're concerned about these other issues. we had an enormous amount of
discussion about retaliation. i'm happy to reiterate it right now. >> i guess here's where i am. i want a more sophisticated approach. i get a kind of stomp your feet approach makes some people feel goold. but in in the integrated econome have is more complex. i think whether you're talking about henry paulson getting them to readjust on monetary policy or the agreement we got on cyber security that needs to be updated that it takes constant dialogue. it's not that there isn't a wto structure and complaints to be filed but the notion that the president thinks and has said with his commerce secretary many times that there will be collateral damage, that there will be a retaliation and that's just part of what's going to happen is just not something i think that an economy like the
state of washington, which is so trade dependent, is ready to embrace. they look at this 1980s view as very retro policy let's start a trade war. with we'd like samsung mo-- something more responsive. >> i'd like to respond to that because i think this is fundamentally wrong. is this the right time to do it? >> this will be fine. go ahead and respond. >> i would say this, to suggest that what we're doing is not sophisticated or nuanced is nonsense. i would also suggest if you look at these dialogues we've had -- and we've had a bunch of them -- china joins the wto in 2002. before that we have herbert walker bush action against china for ip, no result. we have a clinton 301 action for -- against china for ip, no
result. all right? now we start the jcct, we start the strategic economic dialogue. the deficit goes from about 100 to about 200 to about 2250 then they decide while we're talking and getting essentially nothing done through these years of discussions they say, well, here's the problem, the strategic economic dialogue is not working, let's have a strategic and economic dialogue. so they put that on the table, they do that for a couple years, the trade deficit continues to go up with every one of these. i've got a chart that i would like to put in the record if i could mr. chairman at the appropriate time. >> without objection. >> we have had every one of these so-called dialogues have accomplished almost nothing, the trade deficit has gotten worse with respect to every single one of them and then this president came in and said we're going to do exactly what you said, we're going to start a comprehensive economic dialogue and we're
going to have short term, we're going to say here are the specific things and we had a 100 day plan. at the end of the 100 days we essentially got nothing and the trade deficit last year? shockingly, it went up again so the idea that there isn't a plan that we aren't exploring all of these is just wrong so what we decided to do is focus 301 on one of the things that has specifically been a problem and affects almost even agriculture every single part of our economy and during the course of all these dialogues, one of the early ones of which you mentioned, senator, during the course of all of that on ten different occasions china made specific commitments to do things in the ip area and did none of them. >> ten seconds, mr. chairman? the lunacy of an administration that cannot make a layup on the export/import bank and increase exports and yet wants to shoot consumers in the foot with a tariff on costing us something as the next step is something i
disagree with. thank you. >> senator casey? >> mr. chairman, thank you very much and happy birthday. >> thank you. >> pretty bad singers, but we tried. mr. lighthizer, thank you, mr. ambassador for being here and for your work, for your willingness to come back into public service at a difficult ti time. i was struck by a lot of your opening sentence but one sentence that jumped out is "the costs of globalization are falling most heavily on workers." i think it's those last five words that i think are maybe the most important thing you said, falling most heavily on workers. that's been the experience of pennsylvania. we've had a record manufacturing job loss in the last generation. you know a lot of the numbers but the numbers don't tell the
story. just economic devastation that i can't even imagine, lives completely destroyed, trauma and suffering that flows from the job loss. suicides and family breakup and all kinds of trauma is probably the best way to describe it and it started to present itself in the '80s. there is a four or five-year period in the early '80s when half of the steelworker jobs in southwestern pennsylvania were lost. it went from 90,000 to 45,000 in a couple years and it continued from there. and i have to say that i don't think in the last generation either party has done nearly enough. neither party has had in my judgment -- and this applies to multiple administrations, multiple congresses has had an answer for those workers. a lot of talk, a lot of studies,
a lot of theorizing but no answers, or at least no answers that delivered results. and if you don't have a strategy that undergirds the development of an answer i would say i don't think you can get there so i'm asking you about strategy today. obviously to address some of the root causes of this problem you've got to have a strategy that addresses global steel overcapacity which is the most current discussion topic. preventing china from stealing our future. so many instances where china has cheated over and over and over again on currency and intellectual property, trade deals and when they cheat, we lose jobs in pennsylvania, just get hammered over and over again and almost no reaction to that, no response.
and thirdly working with allies to address systemic trade cheaters generally, not just china. so if you could -- and i know this is a lot and you can amplify it in writing if you want but if you could address the -- your strategy or the administration's strategy on global steel overcapacity, addressing that, pushing back on china and then thirdly beyond the cheating china does, working with allies to address those systemic trade cheaters. >> first of all, i would -- we don't have the numbers but i would shorten my response by saying i agree with almost every single thing you said and i only add the "almost" because i have to dice it to make sure there wasn't something. notionally i agree with it. . i think you're right as a matter of fact and as a matter of tone. and i think that administrations for years haven't dealt with the problem and it's not one of
these problems that's going to go away with the invisible hand because there is no invisible hand. everybody else is acting. i would also note in the '80s it was at that point a serious problem also and the reagan administration -- and i had the honor to do this voluntary trade agreements with most of the people in the world and it had a huge impact and saved that industry for that time but not fundamentally so i start off by saying i completely agree with you. now in terms of global steel capacity, you know the issues as well as i do. i've been litigating it and representing steel companies and workers, i agree with you that it's far more devastating than anyone who doesn't see it realizes. it's absolutely devastating and way beyond some guy not having a job, it's families going out and breaking up and opiate addiction and breakdown of society. it's so fundamental and the president is very -- i know
you've talked to him, the president is very moved on this. he completely -- he's very empathetic on these kinds of things and very, very sympathetic to the people who are suffering. so steel, what do you do on steel? you bring cases against unfair trade and i think the industry has done that, the unions have done that and this administration has been very good at prosecuting these and getting them to conclusion but that only solves the problem with steel coming in here, it doesn't solve the problem with china doing it everywhere else. so the president's view is that you try to do this 232. that, i might say, is after yearsover basic discussion and we can talk about this global forum on steel because it's a classic example of the kind of thing that i was trying to discuss with senator cantwell. there's so many opportunities for these kinds of discussions but people understand more and more they don't go anywhere and
almost nothing has been accomplished in that forum. so you tried to make it expensive for china to have excess capacity and that's what we're trying to do in the 232. that's what you're trying to do with trade cases and then you work closely with our allies and we have a trilateral group between the united states, europe in the form of the eu and ustr. we've already had two meetings, we had one right after the 232 and even with the disruption of that the three of us put out a statement saying exactly what you're doing. we have to deal with this problem of non-economic capacity creation and its negative effects on us and i would love it if it was just steel but it's not. it's not just steel and aluminum and it's -- it's semi-kuktors. it's going to be all these things on this list were going to be the reciprocal of what
other people don't want if we don't stand up. so we have a plan, we're trying to make it more expensive for them to do these non-economic things. unfortunately, the wto is not designed to deal with this kind of a problem so -- i should probably stop talking but we decided an initial action would be the 301 and ip. we expect to bring additional ones in areas where we don't have reciprocal response and where we're competing against states or people who operate in a non-economic way. we're very comfortable competing in a reciprocal way in economics. win or lose it's fine but we cannot be in a position where our people cannot compete because they're competing against governments or rules that discriminate against them. >> i'll have some questions for the record that deal with the nafta renegotiation on labor issues. thanks for the extra time. >> thanks, senator. senator shuthune?
>> thank you, happy birthday. i missed the opportunity to sing to you but with all the beautiful voices on that committee -- >> senator benning said you didn't miss anything. >> ambassador, as i have conveyed to you before, while i support the administration'sor all goal of free, fair and reciprocal trade, i'm very concerned about the fact that too little attention is being give on the the class ral effect many actions could have on the other sectors of the economy, particularly the a.g. sector which is important in my state of south dakota and i look forward to hearing about the administration's plans to address those effects but i wanted to take up an issue that in this year's trade agenda you note that president trump gave a reason -- gave as a reason for withdrawing from the negotiations of the tpp that there is "no way to fix the tpp and that we do not need to enter
into another massive international agreement that ties us up and binds us down." that's a direct quote. so the question is given the president's recent remarks at the davos world economic forum in january that he would be opening to joining the agreement, what is the administration's current approach to the transpacific partnership? >> thank you, senator. as you say, the president is not in favor of tpp, he said that during the campaign, he was elected and he did get out. he then indicated that he would -- and i think his exact words were he would be willing to discuss and improve tpp either with the 11 or individually with countries so the way i dice it is as follows, there's 11 countries in the tpp. the united states has an fta with six of those, including all of the big economies with the exception of japan so of the five with which we do not have
an agreement right now, you have $5 trillion in the case of japan where we have asked and hopefully at the appropriate time will begin the process of negotiating an fta. the next two of continue kwens are malaysia where the number is probably 300 and change this is their entire gdp, and then vietnam where it's $295 trillion and then after they that they get smaller quickly so i guess what i'm saying is if you could have a couple fta agreements that would essentially bring in all the -- the vast majority, 95% of the growth potential that you could get out of a tpp and that might be a more effective way to do it. your response might be well, you want to upgrade these other six and that's something that ought to be done, too so there's more ways to accomplish this and it's one of the things on which there is no right answer. is that easier than sitting down and getting 11 people who just came to agreement to change that
agreement? that's something you do more negotiating than i do because you have to do it everyday with your colleagues to make that judgment. in my opinion, i'm better off going to other countries and it's easier than trying to get 11 people to change something that they just agreed to. >> there's a singh agnificant pf grain from south dakota that go to asian buyers, japan and south korea are our most active and loyal customers when it comes to corn and other grains and there are countries in southeast asia that are among the fastest growing feed grain markets in the world so you say that, what is the administration currently doing to maintain and build on the relationships we have with these key asian countries absent a tpp approach? >> i would say there's an enormous amount of stuff being done at usda of which you i'm sure know more than i do.
i would also point out that i just mentioned that. is somebody upon which it's reasonable to suggest the united states have an fta and we've asked and they're in their own political thing but i suspect at some point that will be something to move forward with. with respect to korea, they're in a different category. they're not in the tpp, they're an independent country and in the case of korea we are renegotiating chorus around even the course of that renegotiation has been good for your agriculture sales. i would note korea's bought a billion dollars more agriculture in the last year than they did before and i suspect it's not unrelated to the fact that they want to get the deficit down and show this is an important agreement for the united states. i think it's an example of ways that pressure does have a positive effect on agriculture sales and we ought to be using that pressure when we can so my hope is that we end up with a
successful negotiation with korea. if we do i expect it to lead to additional sales with respect to japan, the other one you just mentioned, that's more or less the position i have. we have asked, it's reason to believe expect at the appropriate time, this is probably not the appropriate time because they just started tpp but that's coming very quickly. >> senator warner? >> thank you, mr. chairman. ambassador lighthizer, good to see you again. let me first of all add my voice to my colleagues. i completely agree with senator bennett that the president's language about our allies -- mexico, canada, eu, there are serious repercussions here and i know you don't probably have access to his tweetage but some restraint would be terribly appropriate and i also agree with senator cantwell that you society you support the export import bank, let's get it
functioning. i want to talk about something that does fall in your lane and that is i think the incredible growing threat of china. i didn't hear you outline areas -- the ranking member and i serve on the intelligence committee -- china has an extraordinarily organized plan around investment in artificial intelligence, machine learning, quantum computing where their goal is to leapfrog ahead of today's technologies and not be our equal but bypass us. we've talked a lot and i think again for many administrations we've allowed china to steal our intellectual property with no pushback. we now have an unprecedented organized effort on chinese investors to invest actually in early-stage companies that we've
never seen before in as organized a way and companies are not aware of the concerns i believe they should have. i think we see in an unprecedented way chinese use their students who come over to this country and then again come back, often times with intellectual property in an organized way that didn't exist two or three years ago. i have huge concerns about the number of american companies that have been so anxious to access the chinese market that they give up their intellectual property and source codes in ways they would never do for entering into any other nation and you made an announcement yesterday, the administration did, about some areas they were going to try to concentrate on and take on ip. i'd like to spell that out a bit more. what i'm concerned about is quietly in some of these companies like alibaba that people may be aware of but there are 20 plus chinese tech
companies with valuations north of $20 billion. senator cornyn, i'm trying to work with him as well, we're trying to reform the cfius process. but the cfius process alone won't get us there when some of these companies have such breadth and scope they can enter into our market. this is outside of your lane but i would hope rather than simply focusing on aluminum and steel that you would look in a much more organized way about the national security concerns, the protection of our intellectual property vis-a-vis china and how we can have not just a trade policy but a whole-of-government policy to warn american companies before they allow, i believe, some of these chinese tech companies to take over our markets in ways they operate on totally different principles than any true market-based economy. they have a market plan, they
have industrial planning in ways that is expotentially greater, not something we should repeat but how is the administration and how is your lane going to help take on this issue? >> well, i would say first of all that it is very encouraging to hear your description of the problem. i totally agree with it. i think in the final analysis what keeps me awake at not, that's keeping me awake at night. defining how to do my job, it will be dealing with this issue. this is very encouraging. whenever i hear it i think why doesn't the intelligence committee take other senators who are not on it and make them sit in the skiff and say look at this stuff. if you did we'd have more people interested in and sympathetic to your view. it strikes me as almost impossible to be exposed -- for a smart person to be exposed to what you're exposed to in that
other committee and not conclude the way you conclude so i agree with it. i would say it's because of that that we focus as our first major thing, we have nafta, we have the steel thing is what it is, we have cases brought but from my point of view the most important thing was this 301 on ip and it was exactly -- i start and end precisely where you are. i agree with you on this issue, i hope senators spend time on this issue of putting a million dollars into ten little things and have one of them pop up and now you're in a position where it's likely a joint use technology, whatever the military effects is but all these effects in terms of our economy going forward develop in the united states and gone from the united states so our remedy will in the 301 will deal with that, i believe, in ways that you'll find helpful and as we announce it and move forward i
hope that you'll engage with the secretary of treasury specifically just person to person on this issue, the issue -- this issue of investment that you just mentioned. >> mr. chairman, let me add one quick comment. some of the low-hanging fruit -- and this is outside of your lane -- we have a 700,000 person backlog on security clearances yet what ought to be one of our top priorities is making sure the chief security officer of every "fortune" 1000 officer has a security clearance so we can share the vulnerabilities that are out there and the nefarious means that these chinese tech companies are going to use. >> senator menendez? >> thank you, mr. chairman, ambassador, thank you for your testimony. in almost all past trade negotiations, intellectual property proved to be a sticking point that required high-level political decisions from us and our trading partners at the final stages of negotiations, given the ip concerns we have in
nafta, especially those involving canada's treatment of innovative life-saving u.s. medicines, what's your strategy for closing out the toughest chapters and delivering a strong ip chapter for u.s. innovators and what are you doing to make sure that intellectual property is a top priority in these negotiations so that innovators in my state of new jersey and others around the country will feel protected? >> well, of course i'm sure by that you're not suggesting that i give out my strategy. but i will say this, i am in complete agreement. i think as you say, in almost every single negotiation, ip is always the last thing to go and the principipal reason is that we're basically creators and the people we're negotiating with are basically takers so they have every instinct and incentive to want to have we can laws so they can get our ip and we do the opposite. ironically -- and it's always a
surprise to people but it won't to you, of course, that canada is very much in the group of people who are the takers and notprotectors. we think of dan as having a similar view to most things we do and we think they would have that way in ip. i think you know and senator hatch knows that's not the case, they have very weak laws, so it's a high priority of something that will go down to the end and that i expect to -- i view myself as being mandated by the committee to make substantial improvements. >> so the bottom line is -- i get concerned since it's virtually always the last thing that after everything else is agreed to then why have a sticking point on ip? but i'll take from your comment -- and correct me if i'm wrong -- that you intend to push for strong ip stan cards in the nafta agreement? >> that's absolutely true. >> okay. now would you agree that having
credibility when negotiating is essential to developing trust and getting a good deal for the united states in these negotiations? >> yes, i would. >> did i hear you say you would? >> yes, it strikes me as an easy question to answer. >> well, it would seem so but have you ever briefed the president on the status of our trade relationship with canada. >> are you going to ask me to go through the numbers? i'm happy to do it. >> i know the numbers, i'm asking him if you've briefed him. >> i talked to him a lot and he was completely right and the numbers are screwy, i'm happy to spend time. >> let me read to your what your web site says. ustr's web site says the u.s. goods and services trade surplus with canada was $12.5 billion in 2016, is that false? >> so conce-- >> is that false? yes or no. >> would you repeat the
question? >> sure. according to ustr's web site the u.s. goods and services trade surplus with canada was $12.5 billion in 2016. is that true or false? it's on your web site. >> if it's on there -- it could be. i'll concede it is. i'm sure you wouldn't give me misinformation. i don't remember that number. >> so if it's on your web site i would assume you maintain that it's a truism, right? >> well, i would assume it is a version of the numbers. i'm happy to go through these numbers with you if you like. i can spend time on it if you like. >> my point is that as i think about whether it's nafta or any other place in the world that credibility is important to any negotiation so when the president has a play tonight disregard for the truth when discussing our trade surplus with canada's prime minister, i can't understand how that helps you in your negotiations. >> that's completely wrong, completely wrong. here are the numbers -- 2017 -- >> what numbers are you going to
give me than what's different than on your web site. >> are you going to give -- >> here's the point, i have limited time. >> i'm happy to go through this. if you raise the issue i'm happy to go through it. >> are you going to give me different numbers than what's on your web site? >> i'm going to give you the numbers. i know what you want to do is get an explanation of these numbers rather than make a political point. >> what i really want to do is reconcile -- if you're going to tell me something different than what's on your web site, i'm happy to listen to it. >> i'm going to give you the numbers, can i do that or not? >> let me go to a last question because i take your web site to be the numbers, you told me if it's on your web site, it's true. >> like most things in trade it's very complicated and there are other numbers that show a massive trade deficit with canada so -- >> then you should change your web site because the average american -- including a member
of the senate -- would look at your web site and it says that the -- according to your web site u.s. goods and services trade surplus -- goods and services with canada was $12.5 billion. so let me ask you this. do you believe an optional dispute mechanism is an effective way to make labor standards enforceable in nafta? >> an optional -- sorry. we're on the issue of numbers. i have to run as the chairman knows but i can't very well stand here and have you make this statement which is i don't agree with at all on the issue of these trade numbers so -- ambassador, i'll asking you a different question. >> mr. chairman, can i submit in the writing the response to the senator on the trade numbers? thank you. >> can you answer me on the optional dispute trade mechanism. ambassador? >> pardon me? >> can you answer me on the optional dispute mechanism? do you think that's a way to
make labor standards under nafta. >> an optional dispute -- oh. so you're saying -- i think we ought to have labor standards enforced to the same extent other things are enforced. >> yes, an optional dispute mechanism is an appropriate way to go ahead? >> senator, your time is up. senator mccaskell. >> mr. chairman, i hope witnesses in the future can be responsive to questions because anyone can eat up my time, i've been around here long enough, 26 years between the house and senate to know when there's a filibuster going on so if you ask a question and can't get an answer and the chairman is going to say your time is up i'd like to get an answer. >> mr. chairman -- >> i'm not against getting an answer. >> senator menendez, would you like to make sure you get an answer before you walk out of the room. >> i'd like to. >> go ahead. >> let's give him an answer. >> i think we ought to have enforceable labor standards. i guess i'm not getting the point of what you're saying.
i've been on record, i've said it many times labor standards ought to be in the agreement and enforced the same way the agreement is enforced. that's my position from the beginning. >> senator mccaskell. >> thank mr. chairman. i remember talking to you in my office before your confirmation, mr. lighthizer. i remember telling you how worried i was about ag. you said, well, you should be. and you know, it was startling to me. first of all, i appreciated your candor. that's unusual in this town to have somebody be that honest about it. and i know you said to one of the other senators earlier that it's going to be unfair what happens to missouri soybeans, but it's for the national good. well, it doesn't feel like it's for the national good to the soybean farmers. you know, this is the thing about trade -- efforts to make trade more fair, is there's
always winners and losers, even in the countries that are trying to push the envelope in terms of trade. and ag is going to be a big loser here if this goes down the path that we're going down. especially if you look at where our ag products go in missouri, which is canada, number one, mexico, number two, and for soybeans, china, number three. so it is really worrisome to an economy that's dependent on agriculture that we're going to say, well, it's for the national good and you guys are just going to have to power through it. i wanted to specifically -- and also, of course, the other one i'm worried about it boeing. do you anticipate that the airplane sales that the president trumpeted, many of which had been in the works for years, before he became president, do you anticipate all those will go through with what you all are doing? do you game this out with your
algorithms, that boeing is going to continue to be able to compete in an even-handed way with airbus or more importantly with the chinese companies that are developing competitors to the boeing aircraft? >> -- i was saying earlier i share your concern. >> no, i know you weren't being -- you weren't saying, too bad for them. i didn't try to make you -- you just acknowledged ag is going to be the easiest target for retaliation. >> it's something that i worry about a lot. so does the president. so with respect to nafta and your sales in nafta, it is my hope we have a successful agreement and those sales are not threatened. it is also my hope we enter into ftas that increase sales. i tried to make that point here today too. now, with respect to if we bring an intellectual property, if the president decides to do something on the 301, will china
retaliate? that's something that's a real risk that we have to -- we've talked about. we have to decide what we want to do when it happens. obviously it's not something i want to talk to you about in this forum, but i want to get your counsel on what you think we ought to do. >> i'd love to. you did name aerospace on your list. >> aerospace is something that's specifically the chinese have decided to be part of their china 2021, and they expect to dominate in that area. they're spending over $300 billion to do that. they're -- and boeing for sure knows. they're very focused on this threat. they're focused on the retaliation to threat of sales now and the noneconomic competition they're going to have to face from china down the road. boeing is in this very peculiar position. >> i would call it precarious rather than peculiar. >> long-term, they have a real risk from china in terms of what
china is trying to do. and they have a short-term problem. we're sympathetic to that. to the extent it comes to real actions afterwards, i want to work with you on that so that you're satisfied. >> i'm going to try to get to one more area before i get cut off. japan was not on the list that you listed of the companies -- countries have that be exempted, correct? >> no. >> and so some of this issue is about businesses that are relying on specialized steel imports. it's not a matter of price. it's a matter of availability. i've got a small company in joplin that relies on japanese specialized steel to make the bearings, and it's not available in the united states. so it is not one of these things that they can actually turn to a more expensive -- they're not bringing this in because they're getting it cheaper than they can
get it in the united states. they're bringing it in because they can't get it. do you have some kind of mechanism in place to rocket those kinds of manufacturing facilities to the top of your exemption list? is there some way they can navigate this? because they have no choice if they want to stay in business than to use this japanese specialized steel they're using. >> i agree with you. i'm sympathetic. there is a process at the department of commerce to do that. i don't really have the people they do, but if you have a specific constituent you say is somehow lost in this process, if you bring it to me -- >> i think all the small businesses are going to be -- all the small manufacturing are going to be lost in this. it's 90 days. it's complicated. the tariff starts tomorrow. there's been nobody reaching out to these businesses that are going to be dramatically harmed by this to say what can we do to facilitate you continuing to even get the product you must
have? nobody's doing that, mr. secretary. >> senator, your time is up. senator carper. >> i just want to note for the record, mr. chairman, that earlier in the questioning, everybody was going over two and three minutes. when you get to the end of the table, man, it gets tough. >> mr. chairman, the senator has got a valid point. is there a response that the senator wants from the ambassador now before we wrap up? >> i don't have any problem with that, but it's just -- >> no, i want to work with you. >> the notion that you and ross and mnuchin can't get in the room and get export/import done is weird. thank you, mr. chairman. >> well, thank you. senator carper. >> ambassador, nice to see you. a number of my colleagues have raised agricultural concerns with respect to the renegotiation of nafta and the loss of tpp, tariffs, imposition
of tariffs from the trickle-down effect on them and their livelihood. i want to echo those sentiments. we only have three counties in delaware. the southernmost county, sussex county, third largest county in america. last time i checked, i think they were maybe the number one soybean county east of the app l appalachian mountains. i want to just reiterate that. i have a question on services. i think between 2006 and 2016, service exports from my state more than doubled, i think, from about $1.5 billion to $3 billion. those expertorts, i'm told, supt close to 20,000 jobs, which is a lot of jobs for delaware. this year's economic report to the president reiterates the fact that the u.s. has a trading deficit in goods, but as you know a surplus in services. the report goes on to say the
report focuses only on the trade and goods alone ignores the u.s. comparative advantage in services. lifted right out of the report. most of the administration's focus today seems to be on goods. we hear very little about expanding trade opportunities for services. so i just ask you two related questions. one, what is the administration doing to take advantage of our comparative advantage in exporting services? two, what is the administration's position on restarting talks on the trade and it was agreement? those two questions, please. >> first of all, i think the number is about $750 billion worth of exports and services. we have -- i think these are approximately right. >> i would just ask, what is the administration doing to take advantage of these -- of our comparative advantage in
exporting services, and what is the position on restarting talks on the trade and services agreement? >> well, on the nafta issue, we have a very, very aggressive pro services agenda involving market access and a whole variety of areas including delivery services. of course, parts of services, we have both a very aggressive area there. we also started a negotiation under -- sort of under the wto. i say sort of because it's a group of countries that agree with us. right now everything is stopped because you get one or two countries that don't want to do anything. so we've gotten a group of about 70 countries that want to negotiate on digital trade and
get their own rules, and we are moving ahead on that as a way to get around the hostage taking and the log jam that we've had. the area of trade and services is something that's been dormant for some sometime. we're looking at it. we see areas of improvement. and the question is whether you start that negotiation and whether or not that negotiation is the quickest way to make improvement or pick out some after the areas that are specifically under it and try to work with them among a group of people who actually are trying to make progress. we're trying to sort our way through that right now. >> my second question is what is the administration's position on restarting talks on the trade and services agreement? >> that's what i say. so the agreement is something that we are studying, and the issue is whether or not -- right now for us, and i'd be happy to
talk to you off-lean aine and g your thoughts on it. the issue is whether you take all those items and you're more likely to make progress in a short period of time. it's something that we're still looking at. we now have our deputies on board as of this week. so we're at kind of a crucial time, and it probably makes sense for us to sit down and talk about it. >> all right. fair enough. thanks very much. >> thank you, senator. senator whitehouse. >> thank you, chairman. how are you, ambassador? first of all, i am, and have been for many years, very, very concerned about what i view as an officially sanctioned and supported campaign by the chinese government to, through
cyber attack, engage in industrial espionage and theft of american intellectual property in order to provide mercantilist advantages to their companies. i appreciate your focus on that. i recall there's been an indictment of chinese military officials for that activity. and hope the administration continues to look at not only the trade aspects of this but what law enforcement aspects might also be appropriate. industrial espionage and theft are industrial espionage and theft even when the criminal perpetrators are from a foreign country. the second thing i wanted to raise with you is an issue that is very peripheral to the main thrust of what this hearing has been about, but i think is an important one for our country. where do you come from? >> i'm from ohio. >> you're from ohio, okay. so you're not going to be much
help in the sense of having a big coastal sensibility. a lot of us in coastal states are seeing very significant harm to our ocean environments, and as a result, senator sullivan of alaska, who gets it even worse than we do in rhode island, and i got together and cleared a bill through the senate unanimously to try to address the problem of marine plastic debris, of ocean plastic junk. now, ocean plastic junk has been traced back -- the bulk of it -- to five asian countries. the reason they're putting all this plastic junk into the ocean is. it then washes up on our shores is because they have lousy upland waste management infrastructure. this has been clearly identified. so my pitch to you is as you are
considering our trade relationship with those countries that you consider the advantage they are securing for themselves by failing to invest in adequate upland waste management infrastructure and that we then face the consequences of all of the plastic junk that piles up in our oceans and along our shores. in alaska, the testimony from dan sullivan's witnesses is we pick up our plastic junk in like trash bags on beach cleanup days. in alaska, they've got to do it with dumpsters and front-end loaders and barges they get so much. because the pacific is the worst because those five countries are the worst. so if we could simply get them to take their upland waste management disposal responsibilities seriously, that would do two things. one, it would eliminate an unfair competitive advantage they have by not paying attention to that.
and two, create a business opportunity for american companies that are expert in, guess what, waste management. so i hope that this is an issue that will pop up on your radar screen. i don't expect it to be your first issue. i hope it's not completely ignored because it is a global problem. the u.n. is beginning to address it. there's been a u.n. resolution about it. they've developed a whole clean seas initiative. noaa has supported the international marine debris conference just now in san diego. the g7, canada's announced they're going to try to make this a priority. the g20 has already released an action plan on this. so there's global progress moving forward that you would, i think, be consistent with. and even the industry is supporting it. the european plastic trade association has made a new marine plastic pledge in january, and the 74 plastics
associations from 40 countries gathered together under the global plastics association, including the american chemistry council, has made a declaration for solutions on marine litter. so you wouldn't be going against the stream. you'd be going with the stream, both of our international partners and our industry. and i take this time with you to urge that you put this on your list of issues not necessarily at the top but where we can be helpful. let's push in on these five countries and make sure they clean up their act. >> thank you, senator. i'm generally aware of the problem, but more specifically aware of it now, and we will look at it. >> great. thank you. i'll follow up. >> thank you. senator cassidy. >> ambassador, thanks for hanging in there, man. listen listen, if tariffs are on steel and not on the finished products, it greatly disadvantages our fabricators. there are folks in korea who are doing finished product and taking it across the ocean and installing it in a major petrochemical plant in southwest
louisiana depriving our fabricators of the business. my concern is if you do tariffs on the raw steel, well, and that has increased the price of inputs for our domestic fabricators, you further tilt it. now you've incentivized folks to build their finished product overseas, and you've increased the cost differential. any thoughts on that? >> we're of course aware of the problem of downstream effects, and that is always something you have to consider when you take any trade action. and your fundamental point is you're generally better off putting tariffs and taking actions on finished products than you are -- it's for shure true in my judgment. having said that, you're in a position where you have a specific problem and you have to figure out how you're doing to deal with it. i think what we have to do, the president has decided to take this action. i think we have to monitor what you're saying very closely and see if there is something that
we should be doing in the meantime somehow to mitigate the problem with respect to specific circumstances. but your fundamental point is -- and the president, by the way, completely agrees. your fundamental point is you're far better off taking action on finished products than you are on input products. >> what seemed to be a disconnect there, you fundamentally agree, the president fundamentally agrees, but you're only monitoring as opposed to implementing. we can predict we are already losing projects to overseas fabricators because their cost of steel is significantly lower than ours, labor lower, et cetera. so let me just ask, if you fundamentally agree, why is there a hesitation in doing something about the finished product. >> well, i'm not -- i guess what i'm saying is you can't not when you have a circumstance that you consider to be a national security issue on the 232. you can't not take that issue for that reason. but to the extent there are specific cases we ought to be looking at, i guess. i'm sympathetic, and i think we ought to be looking at them.
>> secondly, and i don't know this, i'm asking, there is a fabricator in, i think, montana, wyoming, one of those states, who tells me that he bid on a project and lost to a south korean company. the south korean company bid 900,000 for this steel project for a replacement part for a refinery up there. but the transportation costs, according to a logistics company, would be at least $600,000. so the korean company bid 900, won the bid, and you can look at that and imagine there's a subsidy of some sort because they would have had to have taken all their inputs and install it for $300,000 after you factor in the logistics. are we doing anything about the subsidies that are accruing to folks in terms of transportation with these major pieces of a complex? >> well, i don't know about of course that specific case, but as a general matter, yes. this administration has been very aggressive on going after
subsidies, even, i think, people who view themself as fundamentally free traders have to acknowledge there's nothing fair about government subsidies. it's more of a department of commerce issue, but we're happy to take the facts of your specific circumstance and go to the department and have them looking at it. it's complicates when you bring a case and bring a case and can you prove injury on the like. directionally, you're completely right. it's a huge problem. and i've heard stories like this over the years from time to time. they've always been bothersome. so to the extent you have a specific one, we'd like to look at it. >> i heard earlier that it is actually commerce who's responsible for giving the exemptions, but i will say just so you can pass this along that we're requiring small fabricators who make custom pieces to give a specification as to the thickness of the steel, the diameter of the pipe, et cetera, when this is a one
off. it is not a -- something being stamped for a car door, which you will do a million. it is something you're doing 50 of. and the means by which you obtain an exemption is somewhat onerous. is it at all possible we could go to the vendor to sell their steel as opposed to the purchaser, who then has to justify it by giving specs. >> i guess i don't know the detail enough on that. what you're saying strikes me as reasonable, but i don't know exactly how it's set up. i'm happy to look into it, if you like. >> please. okay, thank you. i yield back. >> turn to senator brown. >> thank you, mr. chairman. happy birthday, mr. chair. >> thank you very much. >> good to be with you on your birthday. >> ambassador, welcome again and thank you for your responsiveness pretty much all the time. i appreciate that. i want to make a few comments before i get to one question. first, thanks for what you're doing on nafta negotiations.
i appreciate the new approach. you know a lot of -- you know i place a lot of importance on the labor chapter, on investor state, and strong and enforceable currency provision. i appreciate the cooperation with your whole staff and my staff and you and me personally. i've tried many times. i want to make it clear today. i've said it at the white house. i said it to you in meetings with staff, one on one, that i will strongly support a nafta agreement if it's good for workers. i have confidence you achieve that goal. if you do, i think you will see for sure a lot of democratic support for renegotiated nafta. there's one thing i want to express concern about, an article on the front page of i believe yesterday's "new york times" that indicates provisions are being discussed in the nafta talks that would make it harder for countries to maintain food labeling standards. i don't want to take time to ask you to confirm if the reporting is accurate. i just want to urge you to make sure that a renegotiated nafta doesn't make it easier, doesn't undermine, make it easier to block public health measures on
food labeling. that kind of special interest, multinational, corporate agenda is what made our trade agreements so backward and so reviled by so many in the american public. second statement i want to make briefly, i know you told the committee that korea would be excluded from the 232 tariffs. that's troubling, giving their history of unfair trade practices. a lot of laid off workers in ashtabula and mansfield and places in between in ohio because of their subsidized imports. i urge you to -- i urge you to reconsider the scluexclusion, af your staff would follow up directly on your strategy to exclude south korea. and last thing i want to talk about, briefly about china. i applaud your decision to launch a 301 into china's theft of u.s. intellectual property. we have to reset our trade relationship with china. i think it does that. i know you said tariffs may be part of the remedy it the president chooses to make that decision.
as you know, tariffs are one tool in your tool kit and also temporary. so they can help buy time, but the chinese, as you know, have a long, long history, and they may look at time a little differently from how we do. i know you're considering proposals to address chinese investment in the u.s., which tripled between 2015 and '16. it has gone up tenfold in the last five years. so we should be concerned. i welcome chinese investment in my state, but i have concerns sometimes about their strategies and their subsidies of land and water and energy and capital and all they do. senator grassley earlier mentioned, but it's worth mentioning again, that he and i have introduced a bill that would require a review of certain foreign investments made in the u.s., particularly those made by state-owned companies. the point of our bill is to ensure that as we do with cfius and national security that foreign investments made here are in our national economic
interest. current currently there's no legal mechanism to do that. we want to get this bill signed into law. my question is pretty simple. will you commit to working with senator grassley and mi on our legislation as part of the section 301 remedy package and as part of the administration's overall trade agenda? >> yes, absolutely, i will. i think the korea thing won't be a problem. happy to work with you on that also. >> okay. thank you so much. >> senator scott. >> thank you, mr. chairman. happy birthday as well. good to be with you and senator brown on your birthday. that was nice of him. ambassador lighthizer, thank you for your responsiveness. you and i have had many conversations in t conversations and the lines of communication have been open. i appreciate your responsiveness. one of the reasons why having open lines of communication with you is quite important to me is as a south carolina representative. south carolina has come back to life because of trade. we have 6,000 companies
employing more than 500,000 people exporting over $2 trillion of goods around the world. it's critically important for our major brands from the boeings, volvos, mercedes, bmws of the world to connect with 90% of the consumers who live outside the country. it's critically important for us to have open lines of communication. you've been very responsive. i appreciate that. we believe that good trade policy unlocks opportunity for american families and gives us the tools necessary to make sure our trade partners play by the same rules we do. with those thoughts in mind, i think it's important for us to understand your approach to china. much has been said correctly about chvina's lack of commitmet to world policies. many have been accurately critical of u.s./china trade relations when it comes to manufacturing, ip, and technology. my question for you, how does
the administration view china's efforts to open market access to u.s. companies in other sectors such as financial services, and how do we balance -- or is it possible to increase investment flows between the two countries in those sectors while continuing to challenge negative practices in other sectors? >> so first i would say it's been a pleasure working with you. i find our close working relationship to be important in terms of us getting it right. so i'm grateful. and south carolina has to benefit from this whole process. if you don't, then we're doing something very wrong. in terms of this question of financial services, whether the administration has to demand is reciprocity. the administration has to demand, and i think will take steps to, and i'll deal with you offline on this because it's a next, very important phase of
this. so it's extremely timely. but the essence, in my opinion, of financial services of our policy has to be that china can't operate in the united states on rules that are more favorable than we can operate in china. financial service is important for the reasons you say. it's jobs and this and it's that, but far more important than that, it's where in many cases it's the vehicle by which capital is allocated. if capital is allocated in the state capitalist way that china would do it as opposed to the market driven way we would do it, we're going to have different results in terms of how the economies work out and how our resources are allocated. so the financial services are extremely important. i've dealt with these people -- with people in the industry. i want to deal personally with you now that i know this is another issue that you're interested in. it's a whole variety of things
that are complicated, that are related but different, as you know. to me, the fundamental rule has to be they get the same rules we get and that we have to be extremely careful about how those mechanisms are used to allocate resources for the next hundred years or 50 years. >> okay. thank you. as you know, south carolina has a significant trade surplus with south korea. i understand that you guys are on track to continue the discussions on course. when do you anticipate on releasing objectives for the negotiations, and do you have a time frame on when you think we'll be finished, and how does ustr differentiate between renegotiation and amending the agreement when seeking new asks? >> so this is really important. nafta we're renegotiating using tpa. the objective from the beginning was to make this an easier, simpler thing to do. there's a mechanism under that agreement that we can use and that we are using.
in terms of where the lines are drawn, if it requires changing law, we can't do it in this agreement. it has to be things that we can do by the terms of the agreement. or things they can do themselves that don't require changes in law. but if requires a change in law, then you have to do tpa. our initial objective was not to do that because we thought it would lead to this level of uncertainty that we go on and on and on because tpa, as you know, is a process that requires literally years. so our hope is that we will make the final part of your question is that i hope we are making progress. i meet with -- i met with the -- with my counterpart minister kim yesterday. i met with him the day before. i met with him last week. so it's impossible to predict when you'll end the negotiation, but it certainly is my hope we'll do it soon. i know it's important to you. >> i look forward to continuing the conversation offline on this subject as well. >> good. >> thank you. >> thank you. >> thank you, mr. chairman.
>> my partner has a question. >> really just a statement. i'll be about a minute or so. mr. chairman, steel and aluminum tariffs go into effect in 12 hours. before this hearing, we knew that canada and mexico would be exempt from the tariffs. the ambassador, when i asked him about it, gave us new information that europe, australia, brazil, argentina, and south korea would also be exempt. i bring this up only, mr. chairman, to note that you and i have felt so strongly, and our colleagues, on a bipartisan basis that real consultation means that we have got to get information so as to be able to do vigorous oversight, and that means getting it certainly well
in advance of this morning and 12 hours before the tariffs go into effect. i only make that point because i want to work with you on improving consultation. second point, mr. chairman, i want to direct to the ambassador. ambassador, you're a veteran of the finance committee. and you know that folks here have real differences of opinion. we have pretty spirited debates. i do want to tell you to describe a member of the committee's position, as was the case with senator cantwell, as nonsense is unacceptable to me and i just believe beneath you. so i hope you'll keep that in mind when you next appear before the committee. >> i guess what i was saying is that i disagree with that
problem, and nonsense was an inappropriate term. >> i appreciate your saying that, you know, ambassador, because you're an alum of the committee. we have pretty vigorous debates around here and people differ constantly, but i appreciate your saying that was not what you wanted to say. >> no, you're completely -- i disagreed, but you're completely right. >> i appreciate your clarification. mr. chairman, i'm done. thank you. >> thank you. ambassador, i have to say that i've always enjoyed working with you. you're a straight-up, straight-shooting guy. you're very competent. you have a world of experience behind you. i think we're lucky to have you. i think today's hearing proves that to a degree. not as much as i know you can show, but i think very highly of you. we just wish you the best in working for our country. i have no doubt that you're going to do -- continue to do a
technology. and will likely trigger retaliation from beijing and stoke fears of a global trade war. "the wall street journal" writing that china's government has criticized the u.s.'s planned punitive actions, warning that it will take, quote, all necessary measures to respond. ahead of the announcement, a chinese foreign ministry spokeswoman criticize the the white house's labeling of trade practices as economic aggression, calling such remarks irresponsible. we plan to have the president's remarks live when they get under way here on c-span3. just a couple moments from now. more live coverage coming up a little later. secretary of state rex tillerson is scheduled to give his farewell address to state department employees. president trump has nominated the current cia director, mike pompeo, to head the state department. a confirmation hearing on his nomination is planned for next month. outgoing secretary of state tillerson's farewell speech
expected at 1:15 eastern. while we wait for the president and his announcement on trade tariffs, a representative from puerto rico's education department gives an update on schools on the island. in september, hurricane maria caused major damage to puerto rico's infrastructure. >> all right. good afternoon. is it afternoon yet? we're not quite there yet. before we get to the afternoon, we've got another presentation we want to do real quick before lunch to give you an update on the situation in puerto rico. we started the morning talking about kids in crisis. we know in addition to other issues that we're dealing with as a nation, we've had some natural disasters that our friends and colleagues have been dealing with. i want to take a few minutes before lunch to have secretary kelleher from puerto rico give us an update. we're going to have her come up and do a presentation quick. the secretary has been at the puerto rican department of education for just over a year. before that has done a whole
series of work in 20 years in education, including running a consulting firm and doing a lot of work with schools in districts and has been a college professor, a teacher, a counselor, an assistant principal, has done a ton of work. i learned just a few minutes ago, and this pains me to say as a new england patriots fan, comes from philadelphia, home of the world champion philadelphia eagles. julia, please join us. [ applause ] >> good morning, everyone. thank you for the opportunity to address you today. i want to start by congratulating you all. it's a herculean effort, what you do every day. i was uninitiated when i was appointed, but i have a lot of respect for what you do. so thank you for what you're doing for kids around the nation. so an update on the system in puerto rico. we started the -- we finished, actually, the previous school
year, '16-'17 school year with 1292 schools and 365,000 students. we started this school year with 345,000 students. then after the hurricane, we had 319,000. what we're looking for, for the next year with the fiscal plan and the adjustments we have to make is about 805 schools with around 311,000 students. puerto rico's a unitary system. the secretary of education functions as a chief and as the school superintendent for that system of schools. so the hurricane happened. we had two. september was an interesting month. and it was my first hurricane. the devastation was something, you know -- i don't know that i could actually find words to express what it looked like. seeing people's lives turned upside down and everything that was in a house outside and with people with nowhere to go. but one thing that i learned about puerto rico and puerto
ricans, they are tremendously resilient and kind, good people who all helped each other through a significant period of difficulty. not even -- i mean, there's probably about 30% of the clients who still don't have electricity, and we have regular outages. so we're not operating under what would be normal conditions. i am proud of the fact that the team was able to bring by in about six weeks because we opened october -- the first week of october we tried to have the schools turned back into community centers. by november, we had half of our schools back open. all of our schools were damaged. 22 have been consolidated. and many are open now but working and operating under conditions that are -- that wouldn't meet a standard. we were grateful to have support from the council of great city schools. they september a team